Do you know which red flags commonly trigger PBM audits?

Audits are frequently caused by red flags that trigger alarms at PBM performance and analytics departments

Pharmacy owners often ask us why audits happen in the first place.  Make no mistake, some audits are routine and occur at random intervals with no underlying triggers.  However, a staggering number of audits occur because of certain activities that have triggered an alarm and raised concerns of PBM compliance and analytics specialists.  It is critically important to understand which activities and trends may, and frequently will, result in the pharmacy being audited, and what the pharmacy can do to reduce or eliminate the possibility of audits triggered by red flags.

Most Non-Random Audits Are Driven By Data Trends

At the heart of all PBM compliance efforts are data analytics processes that monitor the pharmacy’s activities and determine if they represent trends that are uncommon, suspicious, or unreasonable.  We will discuss some of these red flags and explain what significance they represent for PBMs in the context of fraud, waste and abuse monitoring activities.

  • High Audit Alert Drugs.  We consistently see that pharmacies are being targeted because they dispense large quantities of so-called “high audit alert” drugs.  PBMs routinely review purchases and dispensing patterns of these drugs because they know that these drugs are often not dispensed to patients.  Sometimes, PBMs observe that these high audit alert drugs represent a large percentage of the overall claims (by number of dollar amount) of the pharmacy.  At other times, an alert may be triggered when high audit alert drugs represent a significantly larger percentage in comparison to other pharmacies.   PharmPilot tracks pharmacy claims for high audit alert drugs and alerts pharmacies when it detects alarming trends.

  • Dispensing of Certain Drugs Exceeds Average Trends.  Another common red flag is when the pharmacy’s claims for a small subset of drugs either exceed that pharmacy’s historical average or represent a disproportionate amount of the pharmacy’s dispensing activity.  Also, PBMs may compare patterns of dispensing large quantities of a small subset of drugs to national or regional averages.  PBMs view these trends seriously and believe that they may represent the pharmacy engaging in improper relationships with providers or drug companies.

  • Correlation Between Number of Claims and Prescribers.  A very common red flag is a significant correlation between prescribing patterns of certain physicians and the number of prescriptions filled by these physicians at a particular pharmacy.  PBMs may determine that a large volume of claims is attributed to a small number of physicians.  Also, PBMs may find that a particular pharmacy may be filling more prescriptions originating from a particular prescriber than could be explained by this physician’s proximity to the pharmacy.  PharmPilot easily detects these trends before PBMs do.

  • A High Number of Dispensed Drugs By a Particular Manufacturer.   PBMs can detect that a pharmacy dispenses drugs by certain manufacturers more often than others and this can sometimes raise red flags.  PBMs believe that this may be indicative of collusion between pharmacies and drug companies’ representatives.

  • Pharmacies Located In Certain Geographical Areas.   Being located in a certain geographical area makes a pharmacy more susceptible to audits.  As more incidence of fraud is detected in those areas, PBMs are more likely to scrutinize activities of all pharmacies located there.

  • Larger Than Average Number of Controlled Substances Dispensed.   PBMs carefully track controls vs. non-controls dispensing by pharmacies and determine if the proportions exceed national or regional averages, or the pharmacy’s historical trends.  Being a heavy dispenser of controlled substances will inevitably lead to more audit activity.

  • Association With Sanctioned Providers.   PBMs closely monitor claims associated with terminated, sanctioned and disciplined providers and those who have previously been criminally implicated in healthcare fraud offenses.  If a pharmacy has significant dealings with such providers, the pharmacy is a prime candidate for an audit or investigation.  PharmPilot tracks claims originating from implicated providers and alerts pharmacies.

  • Migration from Previously Terminated Pharmacies.   PBMs monitor whether a pharmacy has received a significant number of patients from a previously terminated pharmacy, particularly when the two pharmacies are relatively far away so that the migration cannot be easily explained and does not appear organic.  In this case, PBMs view this migration as evidence of potential collusion between the previously terminated pharmacy and the pharmacy at issue, especially if the migration target is new.  In such a case, a red flag is raised for the migration target.

These are just some of the most common red flags that trigger heightened scrutiny by PBMs.  PharmPilot can not only detect these alarming trends and alert a pharmacy that it is at high risk, but can manually review the overall picture from the audit mitigation perspective and spot areas of concern.

Share this post